The British service sector expanded at the fastest pace in eight months in April on strong growth in new order wins, adding to hopes that the modest growth seen in the first quarter would be sustained and recovery will pick up momentum in the coming months.
The seasonally adjusted headline business activity index for the service sector increased to 52.9 in April from 52.4 in March, indicating that economic activity increased at the fastest rate in eight months, a survey by Markit Economics and the Chartered Institute of Purchasing and Supply (CIPS) revealed.
Readings above 50 indicate expansion, while those below suggest decline. Economists had forecast the index to remain at the previous month's level.
"The decent services survey eases pressure on the Bank of England to come up with more stimulative action as soon as at the May MPC meeting next week," IHS Global Insight Chief UK and European Economist Howard Archer said.
Driving the overall pick up in activity, new business received by service providers increased significantly in April, supported by new product launches, better weather and increased foreign demand. In line with the increase in new work, firms raised their workforces for the fourth month in a row, though moderately.
Input price inflation faced by service providers eased in April, owing mainly to a decline in fuel prices. Output charges, however, stayed unchanged month-on-month.
"With the economy showing signs of gaining momentum and inflation running well ahead of target at 2.8 percent, the latest PMI data kills off the likelihood of the Bank of England's Monetary Policy Committee voting for more asset purchases at its May meeting," Markit Chief Economist Chris Williamson said.
Service sector firms said they expect the steady improvement in economic conditions seen during recent months to be sustained in the coming months, and businesses will be benefited from recent marketing, planned new product launches and a strengthening of the housing market.
However, confidence among entrepreneurs was slightly weaker than in April with the economic climate still reported to be challenging and competitive pressures persisting.
"U.K. Service companies still face an uncertain business outlook and tightening government spending," IHS Global Insight's Archer added.
"In addition, there are significant pressures on consumers which are likely to limit the upside for their spending on services for some time to come."
Underscoring the improvement of the general economy, April's manufacturing purchasing managers' survey showed that the ongoing slump in activity eased more-than-expected, helped by a renewed expansion in new orders.
The U.K. economy expanded at a faster-than-expected rate of 0.3 percent in the first quarter and averted a triple-dip recession, largely underpinned by an expansion in the dominant service sector even in the face of austerity program.
Meanwhile, the economy lost its coveted 'AAA' rating for the first time since 1978 when Moody's Investors Service downgraded its ratings to 'Aa1' in February. This was followed by another downgrade by Fitch Ratings this month to 'AA+'.
For comments and feedback contact: editorial@rttnews.com
Economic News
What parts of the world are seeing the best (and worst) economic performances lately? Click here to check out our Econ Scorecard and find out! See up-to-the-moment rankings for the best and worst performers in GDP, unemployment rate, inflation and much more.
May 01, 2026 15:54 ET Central banks dominated the economics news flow this week with almost all major ones announcing their latest policy decisions and many boosted expectations for a rate hike in June. In other news, several countries released the preliminary data for first quarter economic growth. In the U.S., comments by Fed Chair Jerome Powell were also in focus as his term ends this month.